A Question Relating to New Board Members

The purchaser of my model Board Governance Policy Manual for credit unions asked about the legality of the provision that requires a credit union member to be a member two or more years before being eligible to run for the board.

Of course, any user can remove a membership requirement to qualify for nomination or appointment. I put the requirement in there to prevent people from becoming a CU member just to become a committee member or director; what is their purpose and intention?

As a part of the Board's efforts to make the CU successful, it needs to attract the best talent and the most dedicated people it can to lead the CU. If the Bylaws contain sufficient processes and protections, then Governance Policies do not need to address it.

What about the legality? It is not illegal, best I can tell, to introduce reasonable processes to assure the Board is the best it can be. Members can follow the Bylaws to the letter and circumvent Governance Policies that are more restrictive. Therefore, the Board is not mitigating or taking away any membership power. People who have the best motives will not want to circumvent the criteria for doing so may place a cloud over their intentions.

When the Board or the Recruiting/Nominating Committee finds a non-member it desperately wants on the board, the board can adopt a resolution allowing for a one-time waiving of the length-of-membership criteria. The resolution will outline the compelling reasons for its actions, and preserve the integrity of the written policies.

Keep Strategic Planning Pure in Tough Times

I just read some things about strategic planning from McKinsey & Company, and comments from executives to a survey about it. The current environment is causing many firms to alter their planning focus. Some are reshaping their strategic planning processes to generate short-term solutions to fix problems. Others are celebrating their previous strategic planning because the plan prepared them to do better now than many of their competitors are doing.

In your organization, if there are issues such as a negative bottom line, reduced net worth, and other operational things being talked about and worried about, such can stifle visionary thinking and vision creation. One way to stifle the stifle-r, one way to put those concerns to rest, at least for a time, is information.

When you know the concerns, provide a brief report, for example, on the issues and the answers to them: what you are doing to increase cash flow, improve loans, cut costs, delay cash-consuming projects, etc. This information should not be published as a part of the strategic planning process, but published because leaders need to know.

If you are on a long-trip in a motor home, the driver's attention is on the final destination well over the horizon (while also attending to immediate traffic conditions and other dangers). If a fire breaks out in the camper's kitchen, it's difficult to keep driving with an eye on the horizon. Organizational planning can and should be different than strategic planning.

Strategic planning by definition is about the long-term future, understanding what should be in decades ahead (the McKinsey piece talked about century horizons); when you are engaged in planning that is about far horizons, call it "strategic." When, as many executives indicated, they will be focused on near-term issues, then call it what it is, tactical or operational planning; you are skipping strategic planning, for now, to put out the fires.

When you call the annual event, the culmination of a year's worth of research and discussion, "strategic planning," but by necessity conduct shorter-range planning, you risk losing sight of what "strategic" and "strategy" mean. When you name the event based on what you are doing, everyone is tuned in and definitions remain unchanged.

After all, you wouldn't hold a birthday party to celebrate someone's retirement, even though the refreshments and the source for the cake are the same.

While the two planning retreats under discussion are similar, the outcomes are different; the titles we use need to reflect the outcomes.

In times like these, do both levels of planning. Plan to resolve immediate issues. Hold a strategic planning retreat, even if delayed, to collect all that strategic thinking and anticipate all the future issues that could challenge you as you are challenged now.

Who Speaks and for Whom?

Whether the organization should create one opinion all the leaders can support, or whether it should be a CEO's place to speak, if not for all, for self, is a governance question.

Should a CEO, on such weighty matters as involve positions of the national association, positions or actions of regulator(s), or the political arenas of the Statehouse and the U.S Capitol, be out front alone, or are such questions better handled with input, advice and consent from the Board? Look for direction in your bylaws and in your existing governance policies.

As often is the case, there is more than one right answer. If your organization has not decided, why not make this a "Strategic Issue" at an upcoming board meeting?

Here is an excerpt from my II-B if the next version of the Board Governance Policy model manual for credit unions (also good for other nonprofits):

• The CEO is the primary spokesperson for the organization on operational issues, micro issues affecting this organization; designate one or more alternates to speak in your absence.
  
• As spokesperson for the organization on macro matters, issues affecting organizations in this community, in the state, in the nation or the world, on matters of legislation and politics, of positions taken by our trade association, the position and actions of regulatory agencies, the CEO will seek the advice and consent of the Board – we will speak with one voice. This policy, however, does not prohibit the CEO from expressing opinions and taking positions as an individual as long as they carry the note that the opinions and positions expressed are not those of this organization or its board.
  

 
 

A note on free markets to my Congressman

Governance readers: it is the duty of a governing board and top management to create a viable company and keep it viable. That means understanding the needs in society, and the wants of the people who buy things, and delivering what will sell.

The Honorable Allen Boyd, Congressman, 2^nd District, Florida:

I appreciate how difficult it must be to vote against the bailout for automakers. It's a tough stance knowing that many consumers may be out of jobs if we don't help. Workers "vote," in a way, by where they choose to work. We would still have coal-driven locomotives if we allowed workers to demand their right to shovel coal into their boilers. The goal to protect jobs, companies and industries impedes progress.

In a free market economy, any company, no matter the size, needs to make it on its own. The answer is not the socialism that waits at the bottom of the slippery slope of government bailouts for corporations.

Ultimately, every business owes outcomes to societies (e.g. improved standards of living) that exceed the cost of the resources it takes from society (land, labor and capital).

It is apparent to me that the U.S. Consumer has voted against our existing auto industry in the most effective way they can, by buying someone else's products. Would you or I invest in a company that makes poor-quality goods? Why then, should the U.S. Government "invest" in our automakers through a bailout? You have answered "we should not." I agree.

How to Measure Strategies

How do you measure success with strategies? This is one of the issues all leaders face. It seems at first more difficult than measuring the progress on a goal, for example. With a goal there is a final measurement (e.g. 5% improvement in something, 10% increase in something) but a strategy is an activity. A strategy is a behavior, process or structure aimed at evolutionary success.

Let's say that your strategy is a pricing strategy, "Keeping our rates at or marginally below the competition." A measuring device could be a journal, of sorts, a notebook or a scrapbook of clippings that chronicle competition's rates and yours.

The measurement of a strategy is first that actions are taken in accord with it, and second, that those actions worked to improve your business. In this case, first, you are actively looking at the rates in the market place. The specific actions you decide to take in this strategy could be identified on your rate sheets that you can later set next to the journal of competitor's rates.

Execution of the strategy would probably be rate adjustments based on the average of competitors' rates, or the general movements of their rates. That execution is evidence the strategy is being followed. A well executed strategy should be positive to the organization's performance. Poor execution under the strategy could make a perfectly good strategy appear to be the wrong strategy.

There need to be adequate records to help you know if the strategy is okay, while the execution was not. In other words, when performance is below expectations, don't automatically assume the strategy is wrong; examine executions under the strategy and evaluate each of those first.

Execution of this fictitious (though maybe common) strategy is simple enough. If company performance does not maintain or improve in spite of good execution, maybe it's the strategy. If your organization is not as efficient as your competitors' this strategy could be disastrous. Research of competitor economics should precede adoption of this and any competitor-linked strategy.

Leadership in the 21st Century--Charlie Rose Interview

I enjoyed this show and I hope you will too.

What Makes a Vision Statement, Well, Visionary?

What is a “vision statement” is a common question today. There are many answers to that question, too. I see too many visions that sound like slogans. I see corporations advertise what they say are their vision statements but, as I define them, they can’t be their corporate vision statements.

I’m looking for some “pie in the sky” kinds of things with my clients because we’ve had too many decades of planning driven by the practical and programmable; “if we can’t project it reasonably with numbers, then it doesn’t belong in a plan.” Stepping back to the macro view, the CU “movement” no longer exists. It has been replaced by the need to shore up and keep healthy the share insurance fund; nothing wrong with that, except that it is now the primary driver, the priority-end kept in mind for too many CU leaders today.

That low-level view leads to concerns over efficiency, strong bottom lines, etc. And, yes, those are important, but they also detract leaders from considering the greater questions, like why do credit unions exist? Do the original reasons for forming financial cooperatives still exist today? Do consumers care if we provide a choice? For how long will they care? Until we stop thinking only about the company, and start considering our relation to the world around us, we will never get answers to those and many more questions.

All of humankind dreams; how come we don’t stopped allowing businesses to dream of what can be, and then, in the course of business, go for it, try to make it happen? All the leaders we respect and admire had/have visions of the future that their practical counterparts considered untouchable. Yet, they shared their visions in ways that inspired followers. So, the corporate vision gets translated when shared with the followers, the employees. We want to elevate their minds and hearts above their narrower vision of a clear desk and a satisfied customer/member, to something larger than their department, larger than their company … because all companies raise the standard of living or improve the quality of life, or perish eventually.

Since the term “Pie in the Sky” means something good that is promised and never realized, I prefer to think of the visionary things as conditions that ought to be. If we limit our corporate visioning to things we can control, then we’re back to limiting our dreams to operations, the things we put our hands on and feel like we’re in control. However, not all aspects of operations are within the credit union’s leadership to control. Consider interest rates, labor law’s impact on benefits and ADA’s impact on construction. We can’t control the competition that may cost us anticipated revenue after the budget is cast.

My concept of a corporate vision for any company is one that recognizes the external impact your organization can have on its part of the world. It recognizes that the good you do for members does not stop within their households, but spills over to the community where they live. Starting with the end in mind at the community-level helps not only your member/customer, it also helps your employees, volunteers and the companies who supply the credit union and also live in those communities.

The business plans developed by management will be shaped by the limited resources at hand. Priorities over what to do in the next ten years will leave some of the ideals of the corporate vision “unfunded.” As long as the leadership (board and top management) never lose sight of the corporate vision, the company will find new and innovative ways to put projects and practices in place, over time (twenty or thirty years), to make its communities better.

When we have such a corporate vision, we will see stronger business plans. Business plans encompassing 1, 2 and more years will get better because they are no longer within themselves, inwardly focused on immeasurableness, projections, and mathematical certainties. Our business plans need something higher to aim at and to try to produce – the better world as captured in the corporate vision.